There is an ongoing debate about what the US is going thru and what it will go thru: inflation or deflation?

Martin Armstrong says we are in a deflationary monetary cycle. And in the big picture, he is right.

However,

Groovygirl has always said, it depends where you are. And gg has always said, it doesn’t matter how cheap a product/service is, if you don’t have any money to buy it. It is always about can your wages buy the necessaries or not? It really doesn’t matter the actual price, it’s the relation. Can you pay cash to buy a car or must you borrow? Can you borrow? Can you afford the monthly payment? A house? College? Health care? What percentage of your monthly income is spent on debt? 10%, 25%, 50%? If your wages go down, it could turn into 75% overnight?

I remember my grandfather talking about the Depression. He said he was much better off than many people because he had a steady job. He didn’t get a raise for 10 years, but he could save money and buy a car, because prices were low or relatively lower than before 1929/1930. He didn’t have to go in debt to survive. He could pay for food and rental housing and some extras like a car. And he wasn’t ever unemployed during that time.

People were in trouble during the Depression, because they couldn’t get a job, couldn’t earn enough (Farmers) to buy food and shelter, or couldn’t keep a steady income over that 10-year period and fell into debt to buy necessities. So, prices were expensive to them and many were starving and homeless.

It’s the relation of wages (employment) to prices. That’s why people are protesting for a higher minimum wage.

(That’s why people are leaving California with its high state income taxes and high property taxes for the Midwest. That’s why seniors are flocking to states, like Florida, that have no state taxes. People that can move are moving. They can do math and they can save 10-30% simply by moving to a different state and might get a better or steady job.)

But in Germany in the 1930’s, it was all about inflation. But inflation in prices didn’t keep up with wages (because of the country’s debt and their short-term solution of currency manipulation). It was still about the disconnect between wages and prices, but this time is was an inflationary macro environment.

So, structure investments, jobs, and assets to bring in income/gains that will keep up with prices in your home currency. And don’t forget about taxes. Income taxes and other taxes were not as extensive in the 1930’s as they are now. They must be considered in the “price” of living and assume they will go up.

That strategy depends on the rest of the world remaining strong. But if we see a turn down 2016-2020, it is hard to imagine Europe surviving the coming political storm.

groovygirl thought this was very important. This seems the only option to “control” the European debt implosion as everyone else is in a debt collapse, too. It’ s hard for a group of drowning men to save each other. May be impossible, but it gives us an idea of what the “first world”, US allies will try to do. Of course, there is that nasty unknown of shadow dark pool trading…..

March 27, 2014

Click here for a very telling chart from The Burning Platform. But if you have been paying bills for the last 14 years, you already knew this 🙂

The really bad news for the rest of the world is that their currencies are tied to the USdollar, and the dollar has deflated against those global currencies. The rest of the world’s inflation is much worse than ours. Might be a reason for all those “revolutions” and “riots” and negative sentiment toward the US.

March 14, 2014

New interview with Catherine Austin Fitts with Sound Money via zerohedge. Click here. Good one!! Worth a listen. About 24 min. Catherine has a very good understanding about how governments work and how they centralize economics and money and that impact on you and me.

Tyler Durden via zerohedge had an excellent article this morning about the amazing winning percentages of HFT platforms. Apparently the big market for “winning” is currencies. Making fiat money on fiat money with the fastest computer. Fake money and fake traders. Welcome to the virtual world.

But the most interesting thing about this post is not that computers control HFT trading, that the fastest and closest computers always win, that these HFT fat fingers can take down a market in milliseconds, or that currency markets are the main trading market they use to do it.

The scary thing about this chart is that there is a losing side to the winning computer’s HFT bet. Those extraordinary profits were taken from someone’s capital, debt, or savings. And who is that losing side? This is a another angle of the biggest wealth transfer in history.

Side musing: gg thought this little item about Ukraine’s gold air-lifted to NYFed for “safe-keeping” was interesting. Click here. Maybe it is collateral for that billion dollar loan?

Jesse had an update on the new international currency discussion. Click here. A new currency will happen and the pressure is building quick. But what it will look like and how will it change global capital/debt markets?

Groovygirl is off the opinion, like Jesse, that a new international currency will emerge, and national currencies will stay the “same”. But gg is also of the opinion that this new system will not last very long because it will keep as much power/influence with the US. And that strain between the US and emerging markets and outlying markets will continue. This will be a short-term solution (2, 5, 10 years?). Groovygirl is also of the opinion that this new currency will not last, because it will not address the true problem: collapsing global debt.

A good post from Martin. He talks about Europe mainly in this article, as the panic is gaining strength there. But groovygirl doesn’t think the US can make a smooth transition to electric money until this hacking situation is under control. Europe has the chip system, not swipe cards, so they are not as vulnerable to hacking (for now). Although gg agrees with Martin’s thought process that electric money will cut bank runs (the main point controlling cash movement) she thinks the problem of electronic theft (especially in the US from recent events) must be aggressively addressed. Confidence is key to a move to electric currency. Millions of people have been affected in recent months. They may or may not have lost actual money, but many went to use their cards (at Holiday time) and couldn’t because their bank had closed and reissued cards without telling them. That’s a major loss of confidence point in the system.

This interview from a Switzerland perspective on gold/precious metals with Egon von Greyerz. Click here. About 25 minutes.

One important thing he states is that what he thought would happen (collapse of the dollar and its impact on global fiat money system/precious metal investments) is taking longer than he thought. He didn’t think that people would take the huge amount of printed money from all central banks, not just the US, as actual money. gg agrees, she certainly wouldn’t. But not everyone invests as gg would. Short-term profits rule at the moment, no question about it.

And the very important thing he says : “People should prepare themselves to the best of their ability and then just continue to enjoy life.” Excellent advice. Very good interview.

European, and particularly Switzerland, perspective.

This person advises very wealthy people, probably mostly Europeans, so he mentions things like art, diamonds, etc. So, not everything will apply to the Main Street investor.

This person has been in the business/economics for a very long time. When he talks about the fall of the dollar (especially vs the Swiss Franc), it is on a 50-year time line.